What the US-Iran peace deal means for Asia in World Economy News 22/06/2026 Supply relief and sentiment boost The US–Iran peace deal should come as a significant relief for Asia, given its heavy reliance on imported energy and vulnerability to disruptions in Middle East shipping routes. As details firm up, our base case assumes around 50% of oil flows through the Strait of Hormuz resume by end-June, with full reopening only by end‑2026. Even a partial restoration of flows should meaningfully ease tightness in physical markets and reduce precautionary inventory hoarding. This, in turn, is likely to support a rebound in consumer and business sentiment, particularly in countries where recent supply uncertainties had begun to weigh on confidence and activity. Disinflation across Asia, with South-East Asia likely to lead the way Lower oil prices will also be crucial in easing inflation pressures across Asia, particularly through food and fuel channels. The Philippines has seen the sharpest rise in the contribution of food and fuel to inflation and should therefore be among the biggest beneficiaries of any sustained decline in oil prices. Meanwhile, economies with high import intensity, such as India and Thailand, are also likely to see meaningful relief as lower energy costs feed through into transport, food distribution and broader price dynamics. Relief coming, but normalisation will lag as input costs are still elevated Sectors such as petrochemicals, steel and rubber have borne the brunt of this margin compression, driven by elevated oil prices alongside higher freight and feedstock costs. A de-escalation in US–Iran tensions should bring some relief, particularly via lower energy and naphtha prices, helping to stabilise cost structures. However, the recovery will not be immediate. Supply chains – especially in fertilisers and other commodities, are likely to normalise only gradually, as shipment backlogs and logistical bottlenecks take time to unwind, even as traffic